Employment standards officers (ESOs) have a range of procedural measures available to rectify ESA contraventions by employers, whether discovered as the result of an employee complaint or of an inspection.

The main procedures available if an ESO finds "that an employer owes wages to an employee" are the making of "wage compensation orders" and/or "arrangements to pay" ("ATPs") [ESA s.103(1)]. There is also an additional ESO authority to, on the finding of a "contravention" (which may, but not necessarily, relate to a finding of 'wages owing') to make "injunction" (aka "compliance orders") to control future employer behaviour [ESA s.108]. Wage compensation orders, ATPs and injunctions are all discussed in this section.

However readers should also be aware of the availability of specialized "reprisal" orders relating to a limited set of ESA contraventions. These have both compensatory and injunctive aspects and are discussed in Ch.9, s.2: "Offences and Contraventions: Reprisal and Related Remedies".

Finally, a relatively new form of administrative fine procedure - "Notices of Contravention" - may also be brought to bear on contravening employers. Notices of Contraventions are covered in Ch.9, s.3: "Offences and Contraventions: Notices of Contraventions".

(b) "Arrangements to Pay"

"Arrangements to Pay" (ATPs) are relatively informal procedures where, after finding a contravention, the ESO may simply approach the defaulting employer for payment with their co-operation. They may be used as a preliminary stage before an enforceable "Order" (see below) is issued.

ATPs are entirely voluntary, and as such they are not subject to any appeal or review procedures. Another distinction is that an ATP can only require direct payment to the employee, while an "order" (below) can only require payment to the ES Director "in trust" for the employee.

As well, if the employer has no serious dispute with the alleged contravention underlying the ATP, they have an incentive to comply with an ATP as it is not subject to surcharges normally applicable to Orders.

While ESOs should monitor it carefully, employees should be watchful that the use of ATPs does not inadvertently 'run out the time' on the short ESA Order limitation periods (discussed in s.3 above). Unscrupulous employers may consent to ATPs, delay payment until after the limitation period has expired, and then try to rely on the limitation period defence.

(c) Wage Compensation Orders

. Overview

The traditional form of resolution for any legal proceedings is the "Order", whereby the court or tribunal definitively sets out - and formally directs that a party comply with - stated legal obligations. Orders of course are subject to any rights of appeal or other judicial review [see Ch.8, s.2: "OLRB Procedures Respecting ESA Matters: Review Application Procedures"]. This basic principle is embodied in the Act [ESA s.103(8)]:

Every employer to whom an order is issued under this section shall comply with it according to its terms.

As noted above, "Orders" must be made payable to the ES Director, and not the employee directly. However, where a direct (and full) payment is made to the employee - regardless of the terms of the Order - the employee themselves will have no further interest in enforcing the Order, leaving the Director with the choice of pursuing its (now marginal) "Order surcharge" and collector fees and disbursements (see below).

A single Order may apply to more than one employee, which can lead to some mild complexity in terms of finality and reviewability (see "Finality", below) [ESA s.103(3)].

Note that for a limited class of "reprisal"-type contraventions [ie. reprisals, leave, lie detector and retail business holidays], the onus of proof in any ESA proceeding (which normally lies with the party initiating the allegation or complaint) is reversed, and is placed on the employer against whom the allegation is made [ESA s.74(2)]. These reprisal-type contraventions are listed and explained in Ch.9, s.2: "Offences and Contraventions: Reprisal and Related Remedies".

. Maximum Amount of Order

ESOs may not issue Orders in a total amount exceeding $10,000 "with respect to any one employee" [ESA 103(4)]. Of course, single Orders may exceed this limit in total as long as they apply to more than one employee - and as long as they still abide by the limit with respect to each employee.

. Order Surcharge

An "Order surcharge" applies to all ESO Orders (but not to ATPs). It's amount is the GREATER of $100, or 10% of the wages ordered to be paid [ESA s.103(2)].

Note that collectors may also add their collection-related fees and disbursements to the amount owing [see s.5(d): "Payment and Collection of Orders: ESA Collectors: Collector Fees and Disbursements", below].

. Reasons for Order

For purposes of natural justice (a broad legal term basically corresponding to fairness and procedural common sense), legal orders should both outline the required compliance AND set out the reasoning behind the Order. This latter duty has been held to be essential for appealability purposes, so that effected parties can understand and challenge the fact-findings and reasoning underpinning the Order [see the Gray v Ontario Casenote in the Isthatlegal.ca ODSP Legal Guide: Ch.11, s.2].

However, the ESA is a quite vague on the content of this duty with respect to ESO officers:

103(5)
The order shall contain information setting out the nature of the amount found to be owing to the employee or be accompanied by that information.

While this s.103(5) duty can be read very lightly to include only the bare details of the Order (perhaps only an appended calculation sheet), in my opinion it is is likely that a reviewing court would expand on the phrase "nature of the amount" to import a more expansive duty of explanation on ESOs - a duty consistent with the natural justice principles cited above. Such an expansion would be logically necessary for any court faced with the duty of reviewing ESO Orders.

. Service of Orders and Other Documents

Orders must be served on employers in accordance with the service rules set out in s.7 below [ESA 103(6)]. Oddly there is no direct statutory duty stated in the ESA for ESOs to serve Orders on employees (only letters advising them of the Order), though this omission could be remedied by simple inclusion of a copy of the Order [ESA 103(7)].

. Verification of Service

A formal "certificate" evidencing service of the Order (and letter) must be prepared and placed in the file by the ESO as follows. Such certificates must specify, respectively with respect to employers and employees, that:

- the copy of the Order is a true copy,
- the Order was served and the method of service used,
- the letter was served and the method of service used.

. Finality

As noted above, it is a trite implication of any ESA Order that "every employer to whom an order is issued under this section shall comply with it according to its terms." [ESA s.103(8)]. However, legal things are rarely that simple, as the issue of "finality" of an Order illustrates.

The subject of "finality" is primarily related to an Order's collectibility [ie. when enforcement procedures can be commenced, see s.5: "Payment and Collection of Orders", below] and its appealability (or more properly in the ESA context: "review"-ability).

An Order is not "final and binding" until the time limit (30 days: ESA s.116(4)] for requesting a s.116 "review" of the order expires without a Review having been applied for [ESA s.103(9)]:

s.103(9)
If an employer fails to apply under section 116 for a review of an order issued under this section within the time allowed for applying for that review, the order becomes final and binding against the employer.

Note however that the OLRB may extend this 30 days at their discretion [ESA s.116(5)]. "Reviews" are discussed in Ch.8, s.2: "OLRB Procedures Respecting ESA Matters: Review Application Procedures".

It is a necessary implication of s.103(9) that when a Review IS applied for - and pending resolution - the subject order is not yet considered "final", a legal position tantamount to the Order being "stayed" (suspended). This will bar any collection efforts until the review of the order is resolved.

Note that Orders (even if they are for the same wages owed) made jointly against both an employer AND other related parties (eg. corporate directors), are "final and binding" against any party who has not applied for a Review - EVEN IF another party has applied for a Review [ESA s.103(10)].

. Refusal to Issue Wage Compensation Order

If an employee alleges facts in a complaint which could - if substantiated - result in a s.103 wage compensation Order, and the ESO decides to refuse to issue such an Order (eg. denies the complaint "on the merits"), then that refusal decision must be served on the employee by letter [ESA s.110(1)]. Service of refusal letters must be made in accordance with general ESA service rules as set out in Ch.7, s.7.

Similarly, a two-year delay by the ESO in making any resolution of a complaint (ie. neither issuance of an Order nor refusal to do so) results in a refusal being "deemed" at the last day of the two year period. In that case, service of the required refusal letter on the employee is also "deemed" [ESA s.110(2)].

(d) Injunction Orders

. General

These orders (aka "compliance orders") are legally similar to court orders known as "prohibitory injunctions" (ordering the ceasing of a specified behaviour or the ESA contravention) or "mandatory injunctions" (ordering the performance of specified behaviour) by parties. These ESA "injunctions" may be made in order to achieve compliance with the ESA regime. Necessarily ancillary to such injunctions is the ESO's authority to specify a date by which compliance must be made [ESA s.108(1)].

Injunctions are useful where the remedy sought is not monetary in nature, such as may be the case with numerous ESA-mandated behavioural requirements or prohibitions [see the extended discussion of this topic in Ch.5, s.1: "Benefit Plans, Leaves and Other ESA Rights: Benefit Plans: Benefit Plan Enforcement"]. Note however that though they are not available to enforce contractual benefit plan entitlements which exceed the ESA minimums standards, as the key injunction provision requires that someone has "contravened a provision of this Act or the regulations" [ESA s.108(1)]. Cases seeking injunctions to enforce more than ESA minimum standards 'behaviour' will have to proceed through the civil courts, where the legal test for injunctions is quite different [see Ch.2: "Advocacy"].

The ESA injunctive authority [ESA s.108(1)] does not include provisions for wage, fee reimbursement (in the case of temporary help agencies) and other compensation [ESA 108(2)]. However, the making of an injunction order does not preclude bar) an ESO from making of parallel money orders or job reinstatement against an employer or directors of an employer corporation - "in respect to the same contravention" [ESA s.108(3)] [more specifically, it does not preclude the making of s.103, 104, 106, 107 or 108 orders, nor temporary help agency orders (see Ch.1, s.13) for fee repayment (74.14), compensation (74.16), or assignment reinstatement (74.17)].

Note that for a limited class of "reprisal"-type contraventions [ie. reprisals, leave, lie detector and retail business holidays], the onus of proof in any ESA proceeding (which normally lies with the party initiating the allegation or complaint) is reversed, and is placed on the employer against whom the allegation is made [ESA s.74(2)]. These reprisal-type contraventions are listed and explained in Ch.9, s.2: "Offences and Contraventions: Reprisal and Related Remedies".

. Service of Injunction Orders

Injunction Orders must be served on the parties, and be verified as served, in the same manner as s.103 wage compensation orders [see 4(c): "Orders and Related Measures: Wage Compensation Orders: Service of Orders and Other Documents", above] [ESA s.108(4)].

It is a trite implication of any ESA Order that "every employer to whom an order is issued under this section shall comply with it according to its terms." [ESA s.103(8), 108(4)]. However, legal things are rarely that simple, as the issue of "finality" of an Order illustrates.

The subject of "finality" is relates to both an Order's enforceability (ie. when enforcement procedures can be commenced) and it's 'appeal-ability' (or more properly in this case, it's 'review-ability').

An injunction Order is not "final and binding" until the 30-day timelne [ESA s.116(4)] for requesting a s.116 "review" of the order expires without a Review having been applied for [ESA s.103(9), 108(4)]. Note however that the OLRB may extend this 30 days at their discretion [ESA s.116(5)]. "Reviews" are discussed in Ch.8, s.2: "OLRB Procedures Respecting ESA Matters: Review Application Procedures".

It is a necessary implication of s.103(9) that when a Review is applied for - and pending it's resolution - the subject order is not yet considered "final" - a legal position tantamount to the Order being "stayed" (suspended). This will bar any enforcement efforts until the review of the order is resolved.

Additionally, while non-compliance with a wage or monetary compensation Order is enforceable by the collection methods [discussed in s.5 "Payment and Collection of Orders", below], dealing with non-compliance against a behavioural injunction is not so easy.

In the event of contravention of an injunction order [made under s.108(1), above], the ES Director (as opposed to the ESO who made the Order), may make a legal application to the Superior Court of Justice for further injunctive relief [ESA s.108(5)]. Such application may be made "ex parte", which means without notice to the effected employer - though in practice the Director may provide notice where there is no pressing urgency in having the matter resolved.

Technically such a court order is directed at "restraining" a breach of the ESO's original (injunction or other) Order (on its face a redundant legal step), but the net effect is to give the original order the greater status and enforceability of a court injunction, which itself is enforced by the court's "contempt of court" jurisdiction (a topic not otherwise addressed in thie Legal Guide).

. Refusal to Issue Injunctive Order

If a persono alleges facts in a complaint which could - if substantiated - result in a s.108 injunctive order, and the ESO decides to refuse to issue such an Order, then that refusal decision must be served on the complainant by letter [ESA s.110(1)]. Service of refusal letters must be made in accordance with general ESA service rules as set out in Ch.7, s.7.

Similarly, a two-year delay by the ESO in making any decision on such a complaint (ie. neither issuance of an Order nor refusal to do so) shall be deemed to be a refusal made at the last day of the two year period. Service of the required refusal letter on the complainant is also "deemed" [ESA s.110(2)].

The main reason why people do business through corporations is to reduce liability. Corporations, being separate legal entities, (usually) only incur liability to the extent of the corporation's assets (ie. the corporation's own property). This leaves corporate directors (and shareholders) free to incur corporate liabilities without personal risk beyond their investment in the corporation, if any.

A longstanding exception to this principle is embodied in most, if not all, Canadian (federal and provincial) corporations acts (ie. legislation). This exception renders corporate directors personally liable for a maximum of six month's wages of the corporate employees, if certain criteria are first met. The criteria, as explained below, are that wage orders first made against the corporate employer are unenforceable against the corporation, or that the corporation has gone into some form of receivership (eg. bankruptcy).

Below I review these provisions as they occur in the heavily-used Business Corporations Act (Ontario) [OBCA]. Similar provisions are located in all of the following pieces of corporate legislation (the federal versions vary somewhat):

If a corporation created under the OBCA is also an employer, then corporate directors who were 'on the board' when wages of corporate employees come due have potential personal "joint and several" liability for up to six month's unpaid wages [and 12 months vacation pay].

Wages come "due" in accordance with the normal pay period practices of the employer [ESA s.11(1)]. "Joint and several" liability means that a judgment creditor (ie. an employee with a court or ESA order for such unpaid wages) can execute the debt against any (or some, or all) of the joint debtors - without any duty to apportion the debt 'fairly' between them. Basically, the creditor can collect the full debt against whoever they 'catch' first, leaving any disputes over disproportionate contributions to the debtors to sort out by way of cross-claims amongst each other [OBCA s.131].

However, consistent with the principle of primary liability resting with the corporation, these provisions only apply if EITHER of the following occur [OBCA s.131(2)]:

after a wage Order is issued, execution (formal collection proceedings) of the judgment (Order) is attempted against the corporation but is "returned unsatisfied in whole or part";

either before or after a wage Order is issued, the corporation goes into any one of several forms of insolvency, including: liquidation, winding-up, assignment in bankruptcy, or receivership.

It is typical of such insolvency proceedings that, once they are commenced, all pending legal claims and pre-existing Orders (now 'executions') must only flow to and be dealt with by the entity charged with administering the corporate assets (eg. the bankruptcy trustee). This is to ensure equitable distribution of the bankrupt's assets. To facilitate this, all other legal proceedings for such "claims provable in bankruptcy" are stayed (suspended). In the present context, those provisions only stay proceedings against the corporation, and the directors retain their personal liability as discussed here.

Below I will have occasion to refer to the above conditions as the 'narrow triggers' of director wage liability. On this, note that these OBCA director wage liability provisions are different from similar provisions set out in the ESA [see "The ESA Director Wage Liability Provisions", below].

. A Twist: Unanimous Shareholder Agreements

There is a twist on this fairly straightforward principle of director wage liability. Some corporations, usually closely-held ones (ie. one or only a few shareholders), are sometimes structured with "unanimous shareholder agreements" which attempt to limit the managerial authority that the corporation's directors would otherwise normally have, transferring it to one or a few shareholders.

However it doesn't make a lot of legal or other sense to allow this to happen but still leave directors exposed to any resulting liability. Therefore, in the case of such a unanimous shareholder agreement, some corporations Acts [including the OBCA and the Business Corporations Act (Canada)("CBCA")] provide that the directors, in addition to having been relieved of their normal authorities, are ALSO relieved of their normal liabilities - including the unpaid wage liabilities discussed above. Thus both authority AND liability are transferred from the directors to the shareholders who have made the unanimous shareholders agreement [eg. OBCA s.108(5), CBCA s.146(5)].

To accomodate such situations, provisions of the ESA exist which reallocate onto the shareholders the six-month's personal wage liability - for corporations created under the OBCA and the CBCA [ESA s.79,80(1),81].

Note that this 'reallocation' does not apply to some other corporations (many of which will be non-profit or charitable), including [ESA s.80(2-4)]:

i. those under the Not-for-Profit Corporations Act, 2010 (Ontario),

ii. those under the Co-operative Corporations Act (Ontario)], and

iii. extra-territorial corporations (incorporated under laws outside of Ontario) that are both non-profit and that have similar corporate objectives (as are stated in the formal corporate documentation) to the corporations listed in (i) and (ii) above.

. ESA Part XX: The ESA Director Wage Liability Provisions

For sake of reference, I sometimes refer to these provisions as the "Part XX ESA" (ESA ss.79-83) provisions.

Just to make life interesting, the ESA provisions which trigger director (unanimous shareholder) "joint and several" liability for six month's wages are NOT the same as those quoted above in the OBCA example. They are MUCH broader. Rather than being triggered only by unsatisfied execution or insolvency (the 'narrow triggers'), they are ALSO triggered by [ESA s.81(1)] any outstanding (ie. unpaid) wage order against a corporate employer or director - even absent insolvency or unsatisfied execution (the 'broad trigger').

Thus, unlike the corporation provisions reviewed above, director wage liability orders are no longer only a 'last resort' after direct collection against the corporate employer has failed. Consistent with this, the ESA - while reaffirming the primacy of the corporation as the 'main' creditor - also acknowledges that wage proceedings against corporate employers "do not have to be exhausted before proceedings may be commenced to collect wages from directors under this Part." [ESA s.81(2)].

Otherwise, director (and unanimous shareholder) liability for unpaid wages under Part XX ESA is largely similar to that set out in the OBCA provisions (above) in that it is: "joint and several", it covers six-month's "wages"(and 12 month's vacation pay), and it only applies to wage coming due while the director was in office [ESA s.81(7)].

That said, the Part XX ESA provisions - despite the very broad definition of "wages" the ESA otherwise uses [ESA s.1(1) defns: essentially any monetary form compensation due to an employee] does limit the term's meaning for director wage liability purposes by EXCLUDING from it [ESA s.81(3)]:

termination and severance pay, whether based in ESA "minimum standard" or contractual entitlements;

AND

"amounts that are deemed to be wages under this Act"

At first blush this seems an odd provision, but examination of the ESA in total (hey, a key word search on "deem" - welcome to the 21st century) shows several instances of "deemed" wages, listed below. Essentially these are circumstances where the ESA imputes wage value over and above what the common law definition of wages would do:

Subsequent provisions [ESA s.81(3-6] clarify that "wages" for these director liability purposes does include overtime pay, vacation pay and holiday pay at EITHER the ESA "minimum standards" OR contractual rates (whichever is GREATER). Further, interest accrues on wages owed by a director under the ESA provisions [ESA s.81(8)].

Note that the ESA bars any liability avoidance techniques which employers may attempt to create, using either contract or corporate structuring methods [ESA s.82(1)]. That said, "indemnification" (where someone promises to compensate a director for this liability if it is ever actually realized) is allowed from the corporate employer where:

the liability has been "reasonably incurred by the director", and

"he or she has acted honestly and in good faith with a view to the best interests of the employer".

Additionally, "in the case of a proceeding or action that is enforced by a monetary penalty", an additional indemnity requirement applies that "he or she had reasonable grounds for believing that his or her conduct was lawful." [ESA s.82(2)].

. Conflict Between the ESA and the Corporations Act Director Wage Liability Provisions

It would make a whole lot of sense if the statutory provisions establishing director wage liability were - if not conveniently located in one place (which they aren't) - at least identical in their terms in the several places where they are located. This however is not to be. The provisions find themselves scattered across (by rough count) seven different statutes, two different jurisdictions, and embodying variations - sometimes minute and sometimes substantial.

Of these, six are located in the various corporations Acts, and the remaining one in the ESA itself (discussed above). Thankfully, one alone is - in practice - dominant for present purposes: the OBCA (whose provisions are reviewed in detail in the above example).

As is noted, the OBCA provisions apply on their own terms except where a "unanimous shareholder agreement" of the type described above exists [see "A Twist: Unanimous Shareholder Agreeements"]. In that case it appears that the employee MUST have recourse to the ESA provisions to locate liability on the shareholder/s (not the directors, as is explained above), as the OBCA itself bars the directors being liable.

The BIG question however is whether the OBCA provisions [particularly s.81(1)'s 'broad trigger' provisions (see above)] - are GENERALLY available to locate liability on directors, or whether they are limited to the unanimous shareholder situation. On a close reading of Part XX and some related provisions (all of which could REALLY benefit from re-drafting) I am of the view that they do in fact apply generally to corporations - EXCEPT (to repeat some above-quoted provisions) [ESA s.80(2-4)]:

i. those under the Not-for-Profit Corporations Act, 2010 (Ontario),

ii. those under the Co-operative Corporations Act (Ontario)], and

iii. extra-territorial corporations (incorporated under laws outside of Ontario) that are both non-profit and that have similar corporate objectives (as stated in the formal corporate documentation) to the corporations listed in (i) and (ii) above.

Essentially then my conclusion is that Part XX applies to most business corporation situations.

The next question following however is resolution of the conflict between the 'narrow' triggers to director wage liability (set out in the corporations Acts)and the 'broad' triggers set out in ESA Part XX [s.81(1)]. Interestingly, it was in an earlier ESA case on the issue of severance pay liability on bankruptcy: Rizzo v Rizzo Shoes [1998] 1 SCR 27, that the principle was established that any ambiguity in benefits-conferring legislation (which the ESA is), should be resolved in favour of the rights-claimant. Therefore, in my opinion the best legal interpretation is that the ESA Part XX 'broad' provisions, which allow full discretion to ESOs to issue parallel wage orders against both corporate employers AND their directors, prevails.

. ESO Authority to Make Director Wage Liability Orders

Consistent with the broad availability of director wage liability orders under the ESA provisions discussed above [see "The ESA Director Wage Liability Provisions"], if an ESO makes a wage order against an employer, then they "may" (ie. at their discretion) also simultaneously make wage orders against directors [ESA s.106(1)]. Additionally, the Director has discretion to order that such monies owed be paid to them "in trust" [ESA s.106(6)]. Such Orders must be served on the directors in accordance with standard service rules [ESA 106(1)(3)] (see Ch.7, s.7).

Unless they apply for a Review themselves [see Ch.8, s.3: "OLRB Procedures Regarding ESA Matters: Applications"] such orders are final and binding on the director even if another party to the order has applied for a Review [ESA s.106(2)].

Additional (and apparently redundant) legal authority exists for ESOs to make similar orders against further directors, although service (and thus, the legal effect) of such orders is restrained until [ESA s.107(1)] previous orders remain unsatisfied [ESA s.107(1)]. The Director has additional discretion to order that such monies owed be paid to them "in trust" [ESA s.107(2)].

(f) Party-Party Settlements

. General

The parties (usually the employee and employer, but in some cases temporary help agencies and their clients) to some proceedings (primarily those for Orders, see "Application of Settlement Provisions", below) in which a contravention or alleged contravention of the Act is alleged may settle the matter between themselves. If such settlement (hereafter a "party-party settlement") is done in accordance with required ESA formalities, it attracts the operation of the ESA rules set out in this sub-section [ESA s.112].

Note the existence (discussed below in s.5) of another form of settlement between ESA "collectors" and employers ("collection settlements").

. Application of Settlement Provisions

These party-party settlement provisions apply to a settlement of proceedings "respecting a contravention" - regardless if it was commenced by complaint or otherwise.

In order for a settlement to attract the consequences outlined in this section, the parties (both of them) must "inform an employment standards officer [ESO] in writing of the terms of the settlement" [ESA s.112(2)].

While this provision alone does not technically require the parties to set the terms of their mutual settlement out in writing between themselves (ie. by a jointly-signed document or at least an exchange of letters), in all but the simplest of cases (eg. a certified cheque being delivered in an amount satisfactory to the employee) this would only be sensible.

The ESA anticipates ESOs acting in a trust role respecting payment of monies under such settlements. In order to facilitate this involvement, the ESO has legal authority to pay out any monies paid to them under the settlement - such payment being made to either to a party directly or to the ES Director (in trust) [ESA s.112(4)]. Any such monies paid to the Director shall subsequently be paid to the entitled party [ESA s.112(5)].

Some general guidance as to the content of a legal settlement agreement may be found in the Isthatlegal.caSmall Claims Court Guide: Settlement. Note importantly that [ESA s.112(7)]:

No person shall enter into a settlement which would permit or require that person or any other person to engage in future contraventions of this Act.

. Legal Consequences of a Party-Party Settlement

A properly-formalized party-party settlement (as above) has the legal effect of [ESA s.112(1)]:

being binding on the parties;

withdrawing any complaint alleging the subject contravention/s;

voiding any ESA Order made with respect to the alleged contravention/s, except that any Order calling for the payment of "administrative costs" [ie. the order surcharge: see s.4(c): "Orders and Related Measures: Wage Compensation Orders: Order Surcharge", above] to the Director is still enforceable - but only in proportion to the amount of the settlement [ESA s.112(6)].

terminating any other proceedings (except a prosecution) (of course, this provision would only apply in parallel court proceedings to end the settled matter/s, not additional matters).

. Setting Aside a Settlement

Note that if the employee, on application to the OLRB [see Ch.8, s.8(c): "OLRB Procedures Respecting ESA Matters: Pre-Hearing Procedures: Settlements"], shows a party-party settlement to have been "entered into ... as a result of fraud or coercion" [ESA s.112(8)], then:

the settlement is void;

the complaint, Order and/or proceedings are reinstated (as appropriate).

(f.1) ESO-Initiated Settlements

. Overview

New as of 29 November 2010 are ESA provisions allowing settlement efforts initiated by the Employment Standards Officer (ESOs) who has carriage of the subject complaint [ESA 101.1(1)]. Other settlement provisions ("party-party settlements") are discussed in s.4(f) (above).

ESOs are non-compellable (ie. can't be called to give evidence in further proceedings) regarding settlement discussions under their general non-compellability [ESA 90].

In what I speculate was a delay to allow time for ESO officers to be trained in mediation, for the two years after 29 November 2010 this role was undertaken by "a labour relations officer or an individual who is employed in the Ministry and who reports to the Director of Dispute Resolution Services may" [ESA s.101.2 (now repealed)]. The same non-compellability and confidentiality duties and restrictions that now apply to ESOs (as above) applied to these 'temporary' mediation officers, who normally have a role in settling OLRB Review proceedings [see Ch.8, s.8(c)].

. Procedures for ESO-Initiated Settlements

The ESA doesn't set out any formalities for such settlements, but in practice parties can expect it to be negotiated and confirmed by the ESO in writing. Some general guidance as to the content of a legal settlement agreement may be found in the Isthatlegal.ca Small Claims Court (Ontario) Legal Guide: s.13 Settlement.

Note importantly that [ESA s.112(7); 101.1(3)]:

(n)o person shall enter into a settlement which would permit or require that person or any other person to engage in future contraventions of this Act.

The ESA anticipates ESOs acting in a trust role respecting payment of monies under such settlements. In order to facilitate this involvement, the ESO has legal authority to pay out any monies paid to them under the settlement - such payment being made to either to a party directly or to the ES Director (in trust). Any such monies paid to the Director shall subsequently be paid to the entitled party [ESA s.112(4,5); 101.1(3)].

. Effect of ESO-Initiated Settlement

Satisfaction by the parties of any terms set out in such a settlement (even if it requires inaction by a party)[ESA 101.1(2)]:

renders the settlement binding on the parties,

results in the complaint being deemed to be withdrawn,

ends the ESO investigation, and

terminates any other ESA administrative proceedings respecting the matters complained of (though not a prosecution under the Provincial Offences Act).

. Voiding an ESO-Initiated Settlement

If a party to an ESO-initiated settlement can demonstrate that the settlement was entered into by them as the result of fraud or coercion, then they can apply to the OLRB to have it set aside [ESA 101.1(4)]. If the settlement is set aside, it reinstates the complaint and all other proceedings and activities (as noted in "Effect of ESO-Initiated Settlement", above).

(g) Amendment or Rescission of Orders

The ESA anticipates ESOs having authority to amend or rescind (cancel) Orders that they have made. However - without the subject employer's and employee's consent - no order may be amended or rescinded more than two years after the complaint or inspection which discovered the contravention [ESA s.114(4)] [see s.3(d): "Limitations: Two-Years After Complaint or Inspection General Limitation Period on Orders and Notices of Contravention].

(h) Arbitrations for Unionized Employees

There are some provisions in the ESA regarding the use and authority of labour arbitrators [ESA s.100,101]. These provisions, which apply only to unionized employees, effectively transfer much ESO authority to the arbitrators. Arbitrators have no ESA role respecting non-unionized employees. The general transfer, in union situations, of ESA enforcement procedures to the labour relations procedures is discussed in the chapter on "Coverage of Employment Law" [see Ch.1, s.5].

Like the ESO administrative enforcement provisions (ie. Order-making) embodied in the ESA, readers will find that ESA collection mechanisms discussed below are entirely driven by ES staff ("collectors") and administrative in nature, giving the employee no formal (and little other) ability to influence the nature or pace of the government's collection efforts on their behalf. That said, there are non-ESA provisions [SPPA s.19] allowing employees to take personal carriage of enforcement efforts by themselves filing their ESO Order with a court of appropriate jurisdiction for enforcement [see the Isthatlegal.caAdministrative Law (Ontario)(SPPA): Ch.8 Enforcement (and the related Small Claims Court link located there)].

Note as well that the topic of collection of ESO Orders is closely related to that of the "finality" of Orders, discussed above in s.4(c): "Orders and Related Measures: Wage Compensation Orders". Essentially, no Order can be collected on until the time period for filing a review expires or - if a review has been filed, it has been resolved.

. A Note re "Arrangements to Pay (ATPs)

Recall from s.4(a) above ("Orders and Related Measures: General") that the two primary ESA wage enforcement methods are: "arrangements to pay" (ATPs) and Orders [ESA s.103(1)]. Recall further that an ATP can only require direct payment to the employee, while an "order" (below) can only require payment to the ES Director "in trust" for the employee.

Formal enforcement of ATPs appears unnecessary as (presumably) ATPs which are not honoured by employers will later result in the issuance of an Order respecting the owed wages. While s.103(1) is written 'in the alternative' (ie. ATP OR Order), it is apparently read by the ES Director (as is only logical) to mean 'successfully arrange payment', leaving the Order option open in cases of non-compliance.

Therefore this section only considers the collection of ESO Orders. However, employees should be careful to monitor any ATP arrangements made by the ESO to ensure that delay in compliance does not inadvertently run-out any applicable limitation period - particularly those which bar the issuance of Orders more than two years after a complaint was made, a contravention discovered, or an investigation initiated [ESA s.114(1); see s.3: "Limitations", above].

(b) Payment of Order and Review Rights

Some measure of enforceability of Orders is compelled by a rule that no Review (ie. appeal) [see Ch.8] of an ESO Order may be commenced until the amount ordered paid to the Director (in trust) IS paid (or acceptable security pledged) [ESA s.116(1)(b)].

Further, failure to file a Review within the time allowed compels the Director to pay any such trust monies (if paid) out to the parties entitled to it [ESA s.109(1)].

(c) Collection Methods

. General

This section discusses enforcement of ESO Orders by the government itself, formally through the "Employment Standards Director", but practically through their delegates: ESA "collectors" [ESA s.127(1-2,4-5), 128(1)]:

ESA s.1
"collector" means a person, other than an employment standards officer, who is authorized by the Director to collect an amount owing under this Act

With one main exception (see "ESA Garnishment", below), collection of ESO Orders by the ES collectors simply relies on the collection mechanisms available in the civil courts for enforcement of a judgment - a procedure initiated by filing a certified copy of the ESO Order with the appropriate court (almost always the Small Claims Court due to its monetary jurisdiction). As noted above, this procedure is also available directly to the employee, who thereby gains control of the enforcement process.

The collection methods available to the Director discussed here are also available to collect any compensation Orders issued in conjunction with convictions for ESA contraventions [ESA s.135; see Ch.9, s.4(d): "Offences and Contraventions: Prosecutions: Consequences of Conviction"].

. Court-Enforcement

As noted above, the Director may file a Director-certified copy of the Order with any "court of competent jurisdiction" (according to its monetary jurisdiction, thus almost invariably in the Ontario Small Claims Court) [ESA s.126(1,3)]. This essentially converts the ESO Order into an Order of that court, thereby enabling the Order-creditor to use the regular civil court collection methods:

However, if this is done, the Director must serve a letter notifying the Order-debtor of that action [ESA s.126(2)]:

by any form of verifiable mail addressed to the last known business or residential address; or

by fax or email, if the person is equipped to receive such transmissions or mail. Such service made on "a Saturday, Sunday or a public holiday or on any other day after 5 p.m. shall be deemed to have been served on the next day that is not a Saturday, Sunday or public holiday" (ie. the next business day).

Note that notices of contravention may be similarly filed for court enforcement [ESA s.126(4)], but that such Notices only relate to recovery of (what amount to) 'administrative fines' payable to the province, not the employee [see Ch.9, s.3: "Offences and Prosecutions: Notices of Contravention"].

. Note re Choice of Enforcement Court

Recall from above that ESOs may not issue Orders in a total amount exceeding $10,000 "with respect to any one employee" [ESA 103(4)]. Of course, single Orders may exceed this limit in total as long as they apply to more than one employee and still abide by the limit with respect to each employee.

. ESA Garnishments

This collection method is similar to the heavily-used civil collection technique of "garnishment" (discussed at the above Small Claims Court Guide link), which demands of third parties that monies payable to the Order-debtor/s instead be paid to the court (for the Order-creditor) - or as here, the Director in trust. Classic examples of garnishment targets are wages or rents payable to, and bank accounts held in favour of, the employer. In the normal civil court context, the third parties usually pay up as failure to do so can render them directly liable for the debt.

While "regular" Small Claims garnishment appears to be still available once the ESA Order is filed in that court (see above), the ESA version of "garnishment" appears to be in at least one respect broader than civil court garnishment in that it extends not only to debts or other amounts owing the Order-debtor, but also to anyone "holding money for" the Order-creditor, which may (it may have to be tested) be broad enough to catch trust monies held by a third party, with the Order-debtor as beneficiary [ESA s.125(1)].

An ESA 'garnishment' demand must be served on the third party in accordance with normal ESA service rules (see Ch.7, s.7) [ESA s.125(3)].

Like normal court garnishment, compliance with such an ESA "demand" has the legal effect of satifying the third party's debt to the Order-debtor to the extent of the amount paid to the Director [ESA s.125(4)]. However if a third party disregards the demand and pays monies to the Order-debtor in violation of the ESA demand, then they themselves become directly (and jointly with the Order-debtor) liable to the Director for the amounts of any such payments [ESA s.125(5)].

. Collector Fees and Disbursements

ESA collectors may add their own collection-related fees and disbursements expenses) to the Order debt (or "notice of contravention" fine), as the Director authorizes [ESA 127(3), 128(2)] - except that a collector who is required to be registered under the Collection and Debt Settlement Services Act may not collection disbursements [ESA 127(5)].

Note that these fees and disbursements are in addition to the 10% (minimum $100) "Order surcharge" mentioned in s.4(c) above.

(e) Distribution of Monies Received by Collector/Director

. General

The Director has general authority to pay-out monies (with interest) held in trust as is appropriate [ESA s.88(7)]. That said, the following several express provisions require or govern such distributions.

. Where Paid Without Collection

As noted above, once an amount ordered to be paid is both paid to the Director and the Order becomes final [through the non-filing (or resolution of) a Review] then the Director is obliged to pay the received monies over to the Order-creditor [ESA s.109(1)].

In situations where monies paid to the Director respecting an Order are insufficient to satisfy the Order fully, and where the Order relates to more than one creditor, then the monies available will be distributed to the creditor "in proportion to their entitlement" [ESA s.109(2)] (ie. "pro rata").

For example, if the Order is for $1000 to employee A, and $500 to employee B - and only $600 is received - then A gets $400 and B gets $200. No proportion is allowed for administrative costs until the employees are paid in full.

. Where Paid on Collection

However, where money is "collected" by a collector it shall be paid to the following, on a pro rata (proportional to the amount owed them) basis [ESA s.128(3,4)]:

the Director in trust for the employee/s (or to the Order-creditor with the Director's written consent) for wages and compensation;

the Director, for administrative costs (ie. the "order surcharge");

the Minister of Finance, for "notice of contravention" fines;

themselves (ie. the collectors), with respect to collection fees and disbursements.

(f) Collection Settlement

The following "collection settlements" are somewhat similar to "party-party settlements" discussed in s.4(f): "Orders and Related Measures: Settlements", above.

ESA collectors may, in the course of their collection efforts AND with the written consent of the Order-creditor (ie. the employee) [or, in the case of a "notice of contravention", with the written consent of the Director], arrange settlements with the Order-debtor [ESA s.129(1,5)].

Naturally, settlements are for either a reduced amount or for extended payment terms, or both - however the ESA provides that any reduction may not bring the amount below 75% of the Order amount [ESA s.129(2)] [this percentage may be varied by Regulation, but to date none has been passed for this purpose].

Such settlements, if and when complied with, void the Order (or "notice of contravention") upon which they are based. Additionally, any such settlement demonstrated to have been "entered into as a result of fraud or coercion" may be voided by the OLRB [ESA s.129(3,4)] [see Ch.8, s.8(c): "OLRB Procedures Respecting ESA Matters: Pre-Hearing Procedures: Settlements"].

(g) Where Employee Cannot Be Found

In any situation (Order, ATP or settlement) where monies are paid or meant to be paid either directly (as with an ATP) or indirectly (to an ESO or the Director) for the benefit of the employee, but payment to the employee is frustrated due to an inability to find them, then the funds shall be paid to the Director in trust (if required) and thereafter are owned ("vests in the Crown") by Ontario [ESA s.105(1-2)]. If however the employee, their estate or anyone else legally entitled to it appears, the Director may make payment to them - although no interest accrues on such delayed entitlements [ESA s.105(3)].

(h) ESA Orders versus other Debts Owed by the Order-Debtor

Where an Order-debtor (ie. the employer) is in default of an ESA Order it is common for them to also be in default of other forms of private or public debt - commonly other debts (both judgment and non-judgment), various forms of taxes, defaulted mortgages and such like. This gives rise to the issue of how to rank ("prioritize") these competing debts for purposes of ESA collection.

The ESA provides that ESA Order debts have absolute priority over "the claims and rights of all other unsecured creditors of an employer, to the extent of $10,000 per employee" [ESA s.14(1)] [secured creditors are those that have a security interest that allows direct seizure of property, such as a mortgage (for real estate) or a conditional sales agreement or chattel mortgage (for chattel property)]. However, there still remain superior debt entitlements established by federal law [which ESA s.14(1) cannot trump because it is only provincial law]. Thus (generally) federal tax and similar entitlements (income tax and GST) have priority claim over ESA Order-debts.

As well, ANY priorities established under federal bankruptcy law supercede this rule [ESA s.14(2)]. Bankruptcy is the most common situation in which these competing debt entitlements find application. It is beyond the scope of this Guide to explore these priorities further.

(i) Reciprocating States

"Reciprocal enforcement" provisions [ESA s.130] enable cross-enforcement of ESA-related Orders and judgments from - and in - other provinces, countries (and their sub-states, etc). To date the following other jurisdictions (all Canadian) are considered "reciprocating" for these purposes [Reg 289/01, s.2]:

These enable non-Ontario ESA-type court judgments or Orders (which can be enforced in other jurisdictions upon filing a certificate confirming the Order) to be similarly filed for enforcement in Ontario to use our ESA and court collection procedures [ESA s.130(1-2)].

Enforcement of such "foreign" Orders may be initiated by a "designated authority" (akin to our ES Director) making application to the Director with a copy of the Order or judgment certified by the foreign issuing authority [ESA s.130(3-4)]. Collection is handled normally by ESA collectors (see above) [ESA s.127(1)], and is generally subject to the same rules that apply to regarding collector authority, distribution of collected monies, and the reimbursement of collection fees and disbursements (see above).

The Director may in turn file the foreign Order in our civil courts for enforcement by itself or by the foreign "designated authority" [ESA s.130(5)]. Court costs incurred in such collection efforts may be added to the Order being enforced [ESA s.130(6)].

Similar provisions allowing Ontario orders to be enforced in other jurisdictions exist, but of course are governed by the laws of those jurisdictions.

(j) Bankruptcy of the Employer

In wage collection cases it is not uncommon for the employer to enter some form of insolvency, typically bankruptcy, coincident with their failure to pay wages. It is beyond the scope of this Employment Law (Ontario) Legal Guide to explore how the various forms of wage claims are ranked in terms of bankruptcy payout, but two points are worth noting:

vacation pay, being trust funds [ESA 40(1)], may be entitled to a higher ranking in the distribution that other wages;

there is a federal program, called the Wage Earner Protection Program (WEPP) which can compensate employees of a bankrupt company for a portion of their unpaid wages (ie. hourly or salary pay, vacation pay, termination and severance pay) that are payable over the six months prior to bankruptcy.

While most ESA contraventions are discovered as a result of a complaint investigation, ESOs also have a general "inspection" authority. This authority typically applies to review the employer's mandatory wage and other related records respecting employees [see Ch.3, ss.6 and 8: "Wages, Holidays and Vacations:(Records)]. ESOs are entitled to inspect these on request [ESA s.16].

Setting aside for the time being consideration of any Charter search and seizure issues, ESOs also have typical administrative investigative powers including the entry (with and without warrant), inspection and investigation, and demand powers set out here:

"Service" refers to the legal formalities of bringing documents to the attention of parties. The term "filing" generally refers to service of documents on governmental authorities. Service issues under the ESA arise primarily in relation to the triggering of Review or appeal time limits, which typically "start to count" when a decision (eg. an Order or a refusal to issue an Order) is legally held to have been brought to the attention of the parties concerned.

This section addresses service rules that apply to all ESA administrative service situations except the following (for which see the referred-to sections elsewhere in this Legal Guide) [ESA s.95(1)]:

Service of a document really means service of a copy of a document, not the original.

Keep in mind that the below rules are permissive, and not mandatory. Service a document in accordance by any of the below-listed methods is acceptable service, but it does not rule out a determination by the OLRB that other forms of service are also adequate [see "Substituted Service" below]. That said, it is best to abide by these rules whenever possible:

Personal Service

Personal service on a person is achieved by simply leaving a copy of the document with them. Personal service on a corporation is achieved "by leaving a copy of the document with an officer, director or agent of the corporation, or with an individual at any place of business of the corporation who appears to be in control or management of the place of business" [ESA 95(1)(a,b),(2)]. Such service is effective immediately.

Alternative to Personal Service

What is generally known as 'alternative to personal service' may be achieved "by leaving the document, in a sealed envelope addressed to the person, with an individual who appears to be at least 16 years of age at the person’s last known business or residential address" [ESA 95(1)(f),(2)]. The reference to "person" here includes a corporation [Legislation Act, s.87]. Such service is effective immediately.

Mail Service

Mail service is achieved by using any mail method that allows delivery to be verified, sent either to the person's last known business or residential address. The reference to "person" here includes a corporation [Legislation Act, s.87]. Such service is effective five days after mailing [ESA 95(1)(c),(3)]. However, such service is not effective if the intended recipient later "establishes that the service was not effective at the time specified .... because of an absence, accident, illness or cause beyond the person’s control" [ESA 95(6)].

Fax or Email

Fax or email service is allowed if the recipient is equipped to receive the same [ESA 95(1)(d),(4)]. If sent on a Saturday, Sunday, holiday or any day after 5pm, such service is effective the next regular day. However, such service is not effective if the intended recipient later "establishes that the service was not effective at the time specified .... because of an absence, accident, illness or cause beyond the person’s control" [ESA 95(6)].

Courier

Courier service is adequate service [ESA 95(1)(e),(6)]. Such service is effective two days after the document is given to the courier. However, such service is not effective if the intended recipient later "establishes that the service was not effective at the time specified .... because of an absence, accident, illness or cause beyond the person’s control" [ESA 95(6)].

Substituted Service

It is important to note that the service methods listed above are permissive, not mandatory - so if used they will be presumed to have adequately delivered the subject document to the attention of the recipient.

However other methods might also achieve the same goal. This determination can be made by the OLRB, when it is requested by the ESA Director to consider the issue [ESA 95(1)(g),(7-9)]. These rules appear to have been put in place to allow for pre-approval of other service methods (this is called 'substituted' service) but on a generous reading they may also be interpreted to 'post-approve' earlier irregular service methods (this is called 'validating service'). If the OLRB makes such an order, it shall also set out when such service is effective.

(c) Proving Service

When necessary (such as for a hearing), service of a document is proved by means of certificates completed by the party or ESO officer performing the service [ESA 95(10-11)].